FG spent $1bn on kerosene subsidy in 2015 – Osinbajo

ABUJA— Against the backdrop of skyrocketing price of kerosene in the country, Vice President Yemi Osinbajo, yesterday, disclosed that the Federal Government spent $1billion (about N310 billion) on kerosene subsidy in 2015.

He also lamented the low usage of Liquefied Petroleum Gas, LPG, also known as cooking gas, in Nigeria, a situation which kept kerosene and firewood for cooking still in high demand.

Osinbajo stated this on a day the House of Representatives urged the Petroleum Product Prices Regulatory Agency, PPPRA, to review the current price template for Premium Motor Spirit, PMS, otherwise known as petrol, with a view to reducing price per litre to N70 from N145.

But contrary to the officially subsidized price of N150 per litre, the National Bureau of Statistics, NBS, last month reported that national average price of kerosene had jumped to N293 per litre from N288 in September, while it sold at over N300 (double the official price) in some filling stations in Lagos yesterday.

Osinbajo stated this at the ‘Domestic LPG Implementation Stakeholders Workshop’ in Abuja, organized by the Office of the Vice President, Ministry of Petroleum Resources and the Nigerian Liquefied Natural Gas, NLNG.

He explained that in spite of the fact that Nigeria’s total domestic LPG consumption grew from 50,000 metric tonnes per annum to approximately 400,000 in 2015 due to NLNG’s intervention, Nigeria’s per capital consumption of 2.5 kilogrammes, however, remained low compared to its peers in Africa.

He stated: “The low level of LPG consumption in Nigeria has resulted in heavy dependence on kerosene and firewood as primary domestic cooking fuels in majority of approximately 36 million Nigerian households.

Osinbajo

“This reliance on kerosene and firewood has substantial economic effect. Government has had to take in huge subsidies, with over $1 billion spent in 2015 on kerosene subsidy. A significantly high rate of deforestation continues to be recorded as over 95.76 million metric tonnes of firewood was used in 2015.”

Also speaking at the event, Minister of State for Petroleum Resources, Mr. Ibe Kachikwu, said a successful implementation of the intervention strategies would require an investment of up to $25.2 billion over the next couple of years, adding that the investment would be used in providing infrastructure, among others.

Speaking in the same vein, Managing Director of Nigeria LNG, Mr. Tony Attah, stated that to unlock the potentials of the LPG industry, the Federal Government should intervene by removing fiscal and regulatory bottlenecks necessary for creation of a conducive business environment for private sector investment in all segments of the value chain.

According to him, an aggressive and well-coordinated market expansion strategy should lead to the growth of the Nigerian LPG market at annual growth of up to 32 per cent from the current level of 400,000mtpa to over three million mtpa in five years.

Gas marketers react

President of Nigerian Association of Liquefied Petroleum Gas Marketers, NALPGAM, Basil Ogbuanu, said the low level of gas usage in Nigeria could be attributed to the prohibitive entry cost.

He stated: “The problem we have in Nigeria is the entry cost. If you want to use gas now, you need to buy cylinder, which is above N10,000; you need to buy cooker, which is above N10,000; you need to buy hose and regulator before you buy the gas.

‘’This means that you need to budget more than N20,000. The minimum wage in this country is N18,000. How can a worker at that level use gas? Happily enough, we have gas in abundance in Nigeria. At present, less than 30 percent of Nigerians use gas.”

Ogbuanu was of the opinion that the government should adopt the Indonesia or India option whereby governments of the two countries helped in bearing the entry cost of domestic gas usage.

Reps want fuel sold at N70/ltr

Meanwhile, the House of Representatives, yesterday, urged the Petroleum Products Prices Regulatory Agency (PPPRA) to review the current price template for Premium Motor Spirit (PMS), otherwise known as petrol, with a view to reducing the price to N70 per litre, from current N145.

This followed the adoption of a motion sponsored by Abubaker Fulata, entitled: Urgent Need to Review the Petroleum Price Template.

Moving the motion, Fulata expressed dismay over the rumour of a possible hike in the price of petrol in the country.